Rights and liabilities of MortgageeCentral

Section 69A of The Transfer of Property Act, 1882

Appointment of receiver.

1[69A. Appointment of receiver.--(1) A mortgagee having the right to exercise a power of sale under section 69 shall, subject to the provisions of sub-section (2), be entitled to appoint, by writing signed by him or on his behalf, a receiver of the income of the mortgaged property or any part thereof.

(2)Any person who has been named in the mortgage-deed and is willing and able to act as receiver may be appointed by the mortgagee. If no person has been so named, or if all persons named are unable or unwilling to act, or are dead, the mortgagee may appoint any person to whose appointment the mortgagor agrees; failing such agreement, the mortgagee shall be entitled to apply to the Court for the appointment of a receiver, and any person appointed by the Court shall be deemed to have been duly appointed by the mortgagee. A receiver may at any time be removed by writing signed by or on behalf of the mortgagee and the mortgagor, or by the Court on application made by either party and on due cause shown. A vacancy in the office of receiver may be filled in accordance with the provisions of this sub-section.
(3)A receiver appointed under the powers conferred by this section shall be deemed to be the agent of the mortgagor; and the mortgagor shall be solely responsible for the receiver's acts or defaults, unless the mortgage-deed otherwise provides or unless such acts or defaults arc due to the improper intervention of the mortgagee.
(4)The receiver shall have power to demand and recover all the income of which he is appointed receiver, by suit, execution or otherwise, in the name either of the mortgagor or of the mortgagee to the full extent of the interest which the mortgagor could dispose of, and to give valid receipts accordingly for the same, and to exercise any powers which may have been delegated to him by the mortgagee in accordance with the provisions of this section.
(5)A person paying money to the receiver shall not be concerned to inquire if the appointment of the receiver was valid or not.
(6)The receiver shall be entitled to retain out of any money received by him, for his remuneration, and in satisfaction of all costs, charges and expenses incurred by him as receiver, a commission at such rate not exceeding five per cent. on the gross amount of all money received as is specified in his appointment, and, if no rate is so specified, then at the rate of five per cent. on that gross amount, or at such other rate as the Court thinks fit to allow, on application made by him for that purpose.
(7)The receiver shall, if so directed in writing by the mortgagee, insure to the extent, if any, to which the mortgagee might have insured, and keep insured against loss or damage by fire, out of the money received by him, the mortgaged property or any part thereof being of an insurable nature.
(8)Subject to the provisions of this act as to the application of insurance money, the receiver shall apply all money received by him as follows, namely:--
1. (i)in discharge of all rents, taxes, land revenue, rates and outgoings whatever affecting the mortgaged property;
2. (ii)in keeping down all annual sums or other payments, and the interest on all principal sums, having priority to the mortgage in right whereof he is receiver;
3. (iii)in payment of his commission, and of the premiums on fire, life or other insurances, if any, properly payable under the mortgage -deed or under this Act, and the cost of executing necessary or proper repairs directed in writing by the mo rtgagee;
4. (iv)in payment of the interest falling due under the mortgage;
5. (v)in or towards discharge of the principal money, if so directed in writing by the mortgagee; and shall pay the residue, if any, of the money received by him to the person who, but for the possession of the receiver, would have been entitled to receive the income of which he is appointed receiver, or who is otherwise entitled to the mortgaged property.
(9)The provisions of sub-section (1) apply only if and as far as a contrary intention is not expressed in the mortgage-deed; and the provisions of sub-sections (3) to (8) inclusive may be varied or extended by the mortgage-deed, and, as so varied or extended, shall, as far as may be, operate in like manner and with all the like incidents, effects and consequences, as if such variations or extensions were contained in the said sub-sections.
(10)Application may be made, without the institution of a suit, to the Court for its opinion, advice or direction on any present question respecting the management or administration of the mortgaged property, other than questions of difficulty or importance not proper in the opinion of the Court for summary disposal. A copy of such application shall be served upon, and the hearing thereof may be attended by, such of the persons interested in the application as the Court may think fit. The costs of every application under this sub-section shall be in the discretion of the Court.
(11)In this section, "the Court" means the Court which would have jurisdiction in a suit to enforce the mortgage.]

Summary

Under the Transfer of Property Act, 1882, a lender who has the right to sell the mortgaged property without going to court can appoint a receiver to collect the income or rent from that property.
The receiver must be appointed in writing, signed by or on behalf of the lender.
The person named in the mortgage deed should be appointed if they are willing and able to act. If no one is named or available, the lender can appoint someone the borrower agrees to, or apply to the court for an appointment.
Legally, the receiver is considered the agent of the borrower, who is solely responsible for the receiver's acts or mistakes unless the mortgage contract says otherwise or the lender improperly interferes.
The receiver has the power to demand and collect all income in the name of either the borrower or the lender, including by filing lawsuits or executing court orders.
The receiver can keep a commission up to a maximum rate of five per cent of the gross money received, as specified in their appointment, or five per cent if no rate is set, unless the court allows another rate.

Practical examples

1Ramesh mortgages his commercial shop to Suresh to secure a loan. Ramesh falls behind on his payments, so Suresh, who has a power of sale under their agreement, appoints Mahesh in writing on September 1, 2026, as a receiver. Mahesh collects the monthly rent of 30,000 rupees from Ramesh's tenant to help pay off the debt.

2Priya's office building is mortgaged to a bank. The bank appoints Amit as the receiver to manage the rental income. Amit collects the rent, deducts his five per cent commission, pays the municipal taxes of 10,000 rupees, and uses the rest of the funds to pay down the mortgage interest.

FAQ

1. How is a receiver appointed under Section 69A of the Transfer of Property Act, 1882?

Under Section 69A of the Transfer of Property Act, 1882, a lender with the power to sell the property without court intervention can appoint a receiver in writing, signed by the lender or on their behalf.

2. Who is responsible for the receiver's mistakes under Section 69A of the Act of 1882?

Under Section 69A of the Act of 1882, the receiver is legally deemed to be the agent of the borrower, meaning the borrower is solely responsible for the receiver's acts or defaults unless the mortgage deed states otherwise or the lender improperly interferes.

3. What is the maximum commission a receiver can claim under Section 69A of the 1882 property transfer law?

Under Section 69A of the 1882 property transfer law, the receiver is entitled to keep a commission up to a maximum rate of five per cent of the gross money collected, as specified in their appointment, or a default rate of five per cent if no rate is specified, unless the court permits otherwise.

4. In what order must a receiver distribute the collected income under Section 69A of the Transfer of Property Act, 1882?

Under Section 69A of the Transfer of Property Act, 1882, the receiver must pay rents and taxes first, then payments with priority over the mortgage, then their own commission, insurance premiums, and written repairs, then mortgage interest, then mortgage principal if directed, and finally pay any residue to the person who would normally get the income.

Test yourself

1.Under Section 69A of the Transfer of Property Act, 1882, whose agent is the appointed receiver legally deemed to be?

2.Under Section 69A of the Act of 1882, if no commission rate is specified in the receiver's appointment, what is the default commission rate they are entitled to retain from the gross money received?

3.Under Section 69A of the 1882 property transfer law, which of the following expenses must the receiver discharge first when applying the collected money?

4.Under the Transfer of Property Act, 1882, what is a necessary condition under Section 69A for a mortgagee to be entitled to appoint a receiver?

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